HELOC Rate Lock | Fidelity Bank

Control That Rate!

In Northeastern Pennsylvania, if you’re thinking about getting a Home Equity Line of Credit (HELOC), there’s a cool feature you should know about. After you get your HELOC, you can choose to set a fixed interest rate for some or all of the money you borrow. This means you can lock in a rate that won’t change for up to 20 years, even if other interest rates go up.

You can decide to do this at any time while you’re still able to draw money from your HELOC, which is before you start paying it back. You’re allowed three of these fixed-rate locks, but each one has to be for at least $10,000.

Plus, as you pay back what you’ve locked in at the fixed rate, your HELOC credit line goes back up, and you can use it again.

Your monthly payments for these fixed-rate parts will include both the money you borrowed and the interest. This fixed interest rate is different from any special starting rate your HELOC might have and will be determined by your loan amount, how long you’ll have the loan and your credit score. This setup is a great way to keep your payments predictable and manageable, especially here in NEPA.

How to use a HELOC Rate-Lock

When interest rates drop, or an increase is expected, you can contact your HELOC representative to setup a rate-lock in your HELOC account.

Locking in a rate is like agreeing on a fixed monthly payment for the amount you choose. This payment will stay the same throughout the lock term.

Any portion of the HELOC balance not converted into a fixed rate option will continue to have a variable rate and minimum payment in addition to the fixed rate payment.

Get Your Equity Back!

As you pay back the lock-in loan amount, the available credit on the HELOC available funds will increase.

In the example below, if you lock-in $40,000 for 5 years, your HELOC available funds increase as you pay back that loan.

Graph showing the recovery of equity when repaying a lock-in loan.

Extra Rate Tip: Switch Your High-Rate HELOC to a Lower Rate

When interest rates drop, you may want to get an entirely new HELOC at a Lower Rate. Read “Switch Your High-Rate HELOC to a Lower Rate” to find out how.